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Enlarge ImageRequest to buy this photoDispatch.com illustrationAEP wants the Public Utilities Commission of Ohio to force FirstEnergy to stop soliciting customers in AEP’s territory and to surrender the customers it already has in the territory.

The rivalry between Ohio’s two largest electric companies — American Electric Power and
FirstEnergy — has flared this month with a battle before state regulators.

The dispute concerns the rules that must be followed if competitors want to solicit customers in
AEP’s territory.

Columbus-based AEP filed paperwork last week asking the Public Utilities Commission of Ohio to
force Akron-based FirstEnergy to stop soliciting customers in AEP territory and to surrender the
customers it already has in the territory.

AEP took action after FirstEnergy balked at a request to provide the collateral needed to meet
AEP’s credit requirements. That amount, whose dollar value has not been disclosed, is designed to
cover costs if a supplier, such as FirstEnergy, goes out of business and the local utility,
theoretically AEP, needs to step in and provide service.

The amount is based on a formula that includes market share and credit rating.The PUCO likely
will take up the matter at its next meeting, on July 2, a spokesman said.

In response, FirstEnergy filed a formal complaint, the equivalent of a civil lawsuit.

The conflict between the utilities has been simmering, and efforts to resolve it have been
unsuccessful.

AEP said in a filing that, “While AEP Ohio made various attempts to informally resolve this
issue, both before and during commission-assisted mediation, it is clear that (FirstEnergy) has no
intention to provide any collateral.”

FirstEnergy says the rules for doing business in AEP territory make little sense, while AEP says
its rival has refused to follow the law.

Both sides have some ammunition in this case, said Paul Ring, editor of Energy Choice Matters, a
website that follows the unregulated energy industry.

FirstEnergy “has a legitimate complaint that the credit rules might be onerous, but I wouldn’t
say they’re being singled out, and it’s not new to the market,” he said.

Last year, the two companies ran dueling television commercials in an attempt to influence a
PUCO decision on an AEP rate proposal. Since then, though, the rivalry has not been nearly as
public.

One reason for the tension is that FirstEnergy and other companies are marketing aggressively in
AEP territory, putting a squeeze on AEP’s sales. As of March, 49 percent of AEP’s customer base —
based on electricity volume, not customer count — had switched to another provider. That figure is
nearly double what it was in March of last year.